* European stocks dip, euro near lows before inflation data
* Data expected to bolster case for ECB to ease policy
* Asian shares rise as U.S., China activity picks up
By Nigel Stephenson
LONDON, date European shares dipped and the euro
held near 3 1/2-month lows against the dollar on Tuesday ahead
of euro zone inflation data that is expected to bolster the case
for the European Central Bank to ease monetary policy later this
The pan-European FTSE Eurofirst 300 equity index
was down 0.12 percent at 0810 GMT, with technology and
telecommunications stocks among the worst performers.
Traders were cautions before the 0900 GMT release of euro
zone flash inflation data for May and April unemployment
numbers. Price rises in the currency bloc are expected to have
held steady at 0.7 percent, below the ECB's target of just below
"All other things being equal, there are significant risks
for a weaker print. This would further reinforce the call for
ECB action this week. (But) the build-up in expectations ahead
of the decision has increased the risk of disappointment," wrote
Credit Suisse economists in a note on Tuesday.
The ECB meets on Thursday and is widely expected to cut
interest rates, including lowering the rate banks are charged
for depositing funds with the central bank to below zero.
While recent data pointing to a weaker-than-expected
economic recovery have weighed on stocks, the prospect of ECB
intervention has offered some support.
However, expectations of lower euro zone rates, and recent
upbeat U.S. economic data, have combined to push the euro to its
weakest since mid-February.
The single currency was steady at $1.3603,
little-changed on the day and not far from a low of $1.3586 hit
The dollar index, which measures the greenback
against a basket of currencies, was close to Monday's four-month
The dollar stood at 102.35 yen, having earlier hit 102.49,
its strongest in more than a month.
German 10-year bond yields were flat at 1.31
percent, not far from 12-month lows hit last week.
U.S. 10-year Treasury yields rose on Monday to
2.54 percent after the Institute of Supply Management showed
U.S. manufacturing activity accelerated in May. The ISM data
helped push U.S. stocks higher, with the Dow Jones average
and S&P 500 index closing a record highs.
The U.S. numbers and Chinese data showing the service-sector
performance expanded in May at its fastest in six months helped
push Asian shares higher on Tuesday.
Japan's Nikkei hit a two-month high, further boosted
by talk of public pension funds increasing their assets
allocated to domestic shares.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.5 percent, nearing a one-year high hit
"On the whole the world's economy is looking up, growing at
a moderate pace," said Ayako Sera, senior market economist at
Sumitomo Mitsui Trust Bank.
Emerging markets stayed broadly rangebound after recent
gains as U.S. Treasury yields rose. Emerging dollar bond spreads
versus Treasuries stood at 288 basis points, the
tightest in 15 months.
Emerging stocks rose 0.4 percent, just off recent
6-1/2 month highs. Indian shares rose as the central bank eased
some bank liquidity requirements
Higher U.S. and Asian shares helped steady gold after a
five-day losing streak, though the metal was still near a
four-month low at $1,246 an ounce.
Brent crude edged up towards $109 a barrel after the
U.S. and Chinese data lifted the demand outlook.
(Additiional reporting by Jamie McGeever and Sujata Rao in
London, Hideyuki Sano in Tokyo; Editing by Janet Lawrence)